Liz Everett Krisberg, Head of the Bank of America Institute, joins 'Squawk Box' to discuss the state of the American consumer, the impact to income groups and much more.

Washington

Consumer spending in the United States saw a modest increase of 0.2% in June, according to data from the Bank of America Institute. However, this rebound did not fully offset the declines observed in April and May, indicating an overall cooling in consumer activity rather than a collapse. 

The data revealed that higher-income households accelerated their spending, particularly in discretionary areas, while lower-income households continued to pull back. Spending on services, especially travel, declined for the third consecutive month, marking a notable shift. Meanwhile, restaurant spending showed mixed trends, with fewer households dining out but those who did spending more per visit. Wage growth also differed by income group, with higher-income earners seeing faster increases than their lower-income counterparts.

Consumer rebounded in June but didn't offset declines from April, May

Welcome back. Well, the Bank of America Institute has released the consumer checkpoint for the month of July. Data showing that debit and credit card spending increased 0.2% in June. Joining us for a closer look is Liz Everett Chrisburg, the head of the Bank of America Institute. Liz, great to see you again. Great to be here. When we last saw you last month, you were talking about May being the first overall decline in consumer spending that we had seen in over a year. What did you see this time? So we did see the consumer rebound in June, but on a seasonally adjusted basis, that rebound didn't offset the declines that we'd seen earlier in the quarter. So what I would say, what we would say, is if you were taking the temperature of the consumer right now, they're cooling, but they are not collapsing, right? You're seeing households kind of make some decisions, manage their budget, some softness in certain areas, but overall you can continue to say that we're still seeing some resilience. And what I always love about this data is it's 69 million accounts of business and personal, and I always love the way you break it down by age group and generation, but also income. So let's talk about the income groups. You know, we were talking earlier about, you know, with Phil about the airlines seeing the front of cabin, the wealthier still holding up with premium seats, but the back of the plane starting to fall off. What are you seeing in terms of this tail-up to economy? So it's interesting, I was listening to that before, and that aligns with what we're seeing. So the pullback really is predominantly with the lower-income households. Higher-income household spending actually accelerated 1.2 percent this month, and if we break it down even further, looking at services spending, interestingly this month services spending was down just a little bit, just down one-tenths, but really this is the first time we've seen, that's the third consecutive month that services has been down. That's the first time that's happened in, you know, in a long time. And what part of services, so is it travel, is it restaurants? It's discretionary, and in particular travel. So non-discretionary services, insurance, utilities, rent, those are taking a higher contribution, so households are pulling back on the discretionary travel in particular, but if we, it's not a universal experience, so going back to what you were asking before in terms of by income group, we break down and we looked at it by spend per transaction in travel. Spend, you know, number of transactions per month and number of households who are transacting, and what we saw was that there are some households that are pulling back completely from travel. So that, that's what's driving, you know, driving the downturn. Interestingly, that's not the same pattern across other categories of discretionary services. So if you look at restaurants, in restaurants we did see fewer households going out to eat, but the ones that were were spending more per transaction and going out more often. Well they had to spend more because the prices have gone up. Yeah. Well that is, that's definitely part of it, but they're also going out more often. So again, there's this dichotomy between the spending of the higher income and the spending of lower income households, and where that makes sense, one of the other pieces of our data is looking at the after-tax wage growth, how much money people are actually bringing in, and what we saw there is higher income households accelerated again this month, third month in a row, just shy of 3% growth. Lower income households decelerated, they're still making more money, bringing home more money, but it's only up 1.6% as opposed to 1.8. So that I think is what's really driving. And we've got to wrap it, I'm curious what you're seeing on credit card delinquencies, you know, that credit card growth, particularly by generations, a lot of focus on Millennials and Gen Z, are they overusing, are they underusing credit cards, what are you seeing there? So I think on the generations, one of the things we're seeing is that the younger generations, in particular the generations that the individuals who are just coming out of school, who's, you know, they're hitting a more challenging labor market, but overall in general, overall in general, you know, again, resilient is the word.

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